Alimony has long been a matter of much dispute. In 2011, after years of frustration over seemingly disparate alimony figures among judges due to a loosely-worded statute, Massachusetts passed the Alimony Reform Act. Judges are now given the authority to order a termination date for alimony payments. The Alimony Reform Act explicitly states what income, and what types of income, is to be considered in setting an order. While alimony remains a need-based analysis, there are now four different types of alimony in Massachusetts:
- General Term Alimony – the periodic payment of support to a recipient spouse who is economically dependent.
- Rehabilitative Alimony – the periodic payment of support to a recipient spouse who is expected to become economically self-sufficient by a predicted time.
- Reimbursement Alimony – the periodic or one-time payment of support to a recipient spouse after a marriage of not more than five years and for the purpose of compensating the recipient for economic or noneconomic contribution to the financial resources of the payor spots, such as enabling the payor spouse to complete an education or job training.
- Transitional Alimony – the periodic or one-time payment of support to a recipient spouse after a marriage of not more than five years and for the purpose of transitioning the recipient to an adjusted lifestyle or location as a result of the divorce.
M.G.L. c. 208, §48. It is important to keep in mind that alimony is not awarded in all cases. Factors such as a lack of need, insufficient income, or the ability of both spouses to earn a living can influence whether or not alimony is ordered by a judge, and how much. You should speak with an attorney to discuss what you can expect.
Further, alimony and child support, while ordered for different reasons, are not analyzed in a vacuum, and there are many cases where a parent will receive child support instead of alimony. There are different tax consequences for alimony and child support:
- Alimony/Separate Support – alimony is taxable income to the recipient, and tax deductible to the payor. In other words, if Pat is paying alimony to Dana, Dana is paying taxes on the alimony received, and Pat is not.
- Child Support – child support is taxable income to the payor, and not to the recipient. In other words, if Pat is paying child support to Dana, Pat is paying the taxes on the money that Dana is receiving, and there are no tax consequences to Dana.
- Unallocated Support – a court has the ability to order both alimony and child support, but to lump it together as one payment and label it “unallocated support.” In these instances, the court is not specifying how much of the payment is alimony, or how much is child support. The IRS, however, treats these payments like alimony, so taxable to the recipient. In other words, if Pat is paying unallocated support to Dana, Dana is paying the taxes on the unallocated support received, and Pat is not.
To learn about your options, call the attorneys at Finn & Eaton, P.C. at (781) 484-1066 or email us to schedule a free one-hour consultation.